CASE STUDY

Easy Car

Case Study Questions:

1. What sort of business environment and competitive analysis would Stelios Haji-Ioannou have done in 19981999 to decide on launching easycar

Stelios was already operating the airline company which followed low-cost model so he was pretty much aware of the macro-environmental factors which were then faced by the industry the basic analysis that he must have done should be regarding PEST forces.

He was operating an airline company, having said that the effect of PEST forces differs from industry to industry. For example, there are certain government policies and regulations which have a positive impact on one industry but at the same time these policies turn out to be harmful to the other segments of the economy.

one example in this regard could be the restrictions which certain governments impose on foreign imports looking from the perspective of the local producers one can assay that these policies will do good for him because the demand will rise and as a result of this he could charge the extra premium. But this is the only side of the picture, spare a thought for the people associated with import business, these restrictions and policies will surely prove out to be detrimental for their trade activities, this is just one example while there are many such cases where similar policies and other macro-environmental factors tend to shadow entirely different and sometimes dissimilar effects.

Thus he must have first understood the effect of these macro-environmental forces and their effect on his targeted industry.

In addition to this, making the external audit of the industry is also an essential step because this is what makes the firms understand the profitability and the structure of the industry in which they intend to venture.

The best method to conduct this external audit is to evaluate Porter’s five forces which act on the industry. As known, that strategy is one thing which tries to find out ways for a company to be unique and different from others, becoming the best is not important in fact what matters is the uniqueness of a firm.

This analysis makes it easier for the firm to find out paths to success by making even the deadliest of the circumstances to work in its favor.

Thus Stelios must have done this analysis tool, in order to understand the structure of the industry in an apt manner.

2. What experiences did he have which would have allowed him to do this

The major factor which allowed Stelios to venture into this industry was that he understood the price sensitivity of the consumers he wanted to target.

The reason behind the failure or average performance of most of the firms is that they jump into the same game which is being played and that certainly is not the way to go about it.

Success lies in being unique and different and that is exactly what Stelios did he did not play the same old game which was being played then by all the companies, in fact he broke the clutter by catering to an unidentified and unsatisfied needs of the customers, and the thing which made him understand this need was his experience with his airline company.

He identified the importance of price to most of the customers and pursuing the same vision he went on establishing this rental car company.

At that time, the major competitors were competing with each other on all the basic grounds but price but easyCar found its competitive advantage in differentiating the prices offered.

3. What are the advantages and disadvantages of the easyCar concept versus traditional hire car companies such as Hertz, Avis or Budget

As far as the advantages are concerned, the first and the foremost advantage of easyCar was that it started providing people the facility of renting out a car at a price which was much lower than the big players of the market.

This could be rated as the unique selling proposition of easyCar and this is what really pulled the customers in. Price differences reduced the switching costs of the customers and they started preferring easyCar over its other competitors.

As per the basics of strategic management, there are two ways to gain competitive advantage first being product differentiation and second being low cost, in this case, easyCar primarily differentiated it on the basis of the price which proved out to be good for the firm.

Convenience was another advantage which easyCar brought to the customers, instead of going to the agents and seeking cars, the customers could simply log on the website of the firm and get the contract this saved the time of the customers because they could get all the details on the website.

This medium was so popular that 90 of the sales were generated through this medium and the rest from direct sales. EasyCar did not operate from agents this was another advantage because sometimes bad behavior of agents makes the firms lose customers this remained an intelligent move of easyCar.

Each of the easyCar outlets deals with one car depending on its location, this also made the firm reduce the cost, and customers too did find comfort in this because they could directly go to the outlets where their preferred cars were available, this provided the customer’s ease.

On the disadvantage, in my opinion, is that the number of outlets at the airports is not at all sufficient, so this is one thing which makes it hard for the customers to get to the easyCar outlets, thus the sales of the firm get hurt.

Another minor flaw which I found was that almost all the cars which are offered by easyCar belong to an expensive class there are tourists who want to drive cheap cars for lesser rates than what easyCar is offering so they go to the local rental company which obviously is not good for the firm.

So in order to make these people come to easyCar, the management must begin to induct cheap or maybe second-hand cars in its fleet if not at all of them then such cars could be placed at some of the facilities so that this segment is not left uncovered.

There are some companies which do not charge all the money in advance so the customer for obvious reasons likes to go to them to get the cars the advance payment policies must be revised by the management so as to increase the customer base.

4. Was easyCar.com a step change in strategy or a logical product line extension Do you think the overall easyCar strategy has changed since the business was launched

In my opinion, this was a logical product line extension the reason behind this is that Easy Jet’s strategy was also of low cost and the same was what easyCar followed later Easy Jets successful strategy was what motivated the owner to go an venture in the car rental segment.

If we examine the policies and strategies of both the firms it can be concluded easily that there is no difference in both of them. Both companies are catering to the price-sensitive segments of their respective industries.

The overall strategy has not at all changed because easyCar still focuses on its core identity and that is to provide people convenience and value at a cheap cost this is the reason that the firm is shaping its policies in such a manner that the price-sensitive people get more and are more attracted.

All the operations of easyCar are working while giving this idea the center place for example if we analyze the promotion strategies we get to understand that most of the publicity and advertising is done by using posters and newspapers and the reason behind this is that the firm does not want its expenses to rise because if they do then it will become hard to provide low-cost services to the customers.

Another example in this regard is of the cleaning policies this has been introduced so that customers do not have to pay 16 more for cleaning expenses, which eventually reduces the burden of the customers.

5. Do you think the overall mission statement for the easyCar business is effective in describing the business Support your analysis

A successful mission statement generally has nine basic components which are to be addressed if all of them are kept under consideration while writing the mission statement then it can be said that the mission statement is a well chalked out one.

These nine components include customers, product or services, markets, technology, survival and profitability, philosophy, self-concept, concern for public image and concern for employees.

If we just talk about describing business then it can be stated that all the unique aspects of the business are being communicated in this mission statement.

But if this mission statement is evaluated on the basis of the nine key factors which are described above then it looks just about an average mission statement some important points are missing in this mission statement, for instance, there is no point whatsoever which describes the organizations concern for its employees which obviously is not a good thing because not mentioning the importance of employees in the mission statement sends a negative signal to the customers they perceive this as if the employees are not respected deeply by the management.

Similarly, there is no comprehensive statement about the markets which the firm wishes to target concern for the public image is also one factor which is left untouched in the mission statement of easyCar.

EasyCar is targeting mostly the segments that are price sensitive and want value for their products. Basically, there are two distinct segments that make up the market for easyCar first being the leisure or tourist segments while the other is the business segment.

The needs and wants of both these segments are different from each other tourists want lower rates because their basic aim is to travel so this is one segment which is highly price-sensitive, these people are mostly switchers and usually they opt for those companies which provide low-cost services this segment makes up around 45-65 of the whole market,

thus in order to acquire the market share this segment has to be emphasized. The business segment is one which is less price-sensitive in comparison with the last segment, these people go for convenience and quality this segment makes up around 35%-55% of the entire market.

In order to achieve long-term success and lasting market share such policies are needed to be made which focus simultaneously on both these areas because easyCar cannot afford to leave out or hurt any of these segments while pleasing the other one.

If we evaluate the policies and practices of easyCar, it can be easily found that the firm is trying hard to please both segments at the same time one example in this regard could be of starting the advertising campaign on television the firm was advertising before just through posters and newspaper ads but these are less effective when it comes to targeting the business segment so the firm has planned to market its services via television campaigns.

As mentioned before, that business segment is one which demands more quality of the product and that is the reason that easyCar went on establishing more facilities near the airports (this move proved good to both the segments) and it also includes more cars in the fleet because business segment is far more choosy than the other one .EasyCar has always been finding out ways to lower down the charges this shows that it does not want to leave the tourist segment alone cleaning car policies indicates towards this fact that the firm is determined to reduce the prices further so that it could acquire more market share.

7. How would you position the overall strategy of the Easy network of companies versus competition

Discussed before as well, that there are two ways to achieve a competitive advantage, first being product differentiation and second being low cost.

Easy network of companies have been focusing on the second one from the first day and this has been the reason of their success without changing or altering the products too much they have been able to earn profits because they emphasized on catering to the price-sensitive market.

This has been the secret of their success, no matter which business they ventured in they did not change their core strategy and kept on playing their very own game in all the industries and so far their tactics have proved out to be profitable for them.

EasyJet focused on offering low prices to its customers and made huge impact, then came in easyCar with the same strategy and influenced the market this epitomizes that low cost is still what some sectors are hungry for and if they get this in some good proportion of quality then they get attracted and as a result sales get generated.

8. The Easy Internet Car Business was also a new development, but much less successful than easyCar. What is the reason for this difference

The first and the foremost reason behind the unsuccessful internet business was that, internet is one thing which is already been provided to the customers at a cheap rate and the USP of easy network of companies is low cost but this feature was already presented to the customers by the competitors so the expedition did not turn out to be lucrative one.

Another reason for the failure of this service was that the level of service was not that good as the customers were expecting it to be.

Client Profile:

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